How Do We Know that Cryptocurrency is not in a Bubble ?

May 11, 2018 3 min read

Believe it or not, we are still at the very beginning of the cryptocurrency craze and are not even close to being in a bubble.

You’ve heard the news about the ‘Bitcoin bubble’ and how it is going to come crashing down faster than a cartoon anvil. This week we heard 94-year-old Charlie Munger of Berkshire Hathaway refer to Bitcoin as a ‘combination of dementia and immorality’ and Bill Gates saying he would ‘short it if he could.’

Despite the naysayers, there are a lot of reasons to believe that cryptocurrency is not a bubble. So let’s get real and bust some major myths :

Mass adoption is not here yet, but it is coming.

Have you noticed that over time you keep hearing more and more about cryptocurrencies, with them popping up in your news feed a little more each day?

People are talking about cryptocurrencies all the time, but they aren’t using them for much other than for investing. This may make you think we’re in a bubble, but it really means the bubble is yet to arrive.

The reason that cryptocurrencies are mainly used for investments is that the infrastructure for cryptocurrencies is still under construction. While there are a few vendors such as Overstock.com that accept cryptocurrency, there are many more who are working on it.

Just imagine if you could use Bitcoin on Amazon or at the mall. You would be much more likely to spend your cryptocurrency investment gains if you could spend them with a simple barcode scan. Once a big name like Amazon starts accepting cryptocurrency, it is going to be huge.

That reality is coming. Amazon Web Services is already introducing back-end support for blockchain infrastructure, and Facebook just re-assigned the head of their messenger app team to explore blockchain possibilities.

David Marcus will leave Messenger to explore blockchain for FB

If you could use your Bitcoin wallet like your checking account, why wouldn’t you? Bitcoin is likely to increase in value much more than the dollars in your account, and you won’t need to deal with a bank or pay fees to store and spend your money anywhere in the world.

The trend of more vendors accepting cryptocurrency is going to spur mass adoption fast. The ‘bubble’ will not be bursting before mass adoption happens, and it will get much bigger once it does.

Institutional money just started pouring in

When you think of the tech bubble you think of venture capitalists, hedge funds, and institutional investors. This brings up the classic image of a tech bro pitching the next ‘Uber for something’ to a board of high profile executives.

Institutional money fueled the over-valuations that led to the tech bubble bursting in the early 2000s. Bitcoin has not been like that at all.

The price of cryptocurrency has increased because individual investors like you and I see the value and utility in it. The institutional investors are just now starting to get involved after individuals have made it popular.

Two major stock exchanges recently opened Bitcoin futures trading and just last week Goldman Sachs announced it will open up a Bitcoin trading operation. Once the institutions wake up to the reality of cryptocurrencies, the money will start coming in fast.

This leaves a lot of room to grow before we hit bubble territory.

The total market cap is still very low

The tech bubble is estimated to have popped at $2.948 trillion. The cryptocurrency market capitalization (value of all cryptocurrencies combined) is about $450 billion. If you count for inflation since the year 2000 when the tech bubble burst, that puts the current cryptocurrency market cap at about one-tenth of the tech bubble right before the peak.

While $450 billion is a lot of money, it is not enough to destroy the world economy if it crashed nor is it so high that there couldn’t possibly be more room for growth.

To put this in perspective, the total value of the top 5 tech stocks in the world is currently $3 trillion, much higher than the total of all cryptocurrency.

Once we see the mass adoption and the institutional investment into cryptocurrency, the market cap will be able to grow many multiples of what it is now. $450 billion is not a bubble number, not even close.

Satochi can help you get in before an actual bubble grows

With Satochi you can get in on the action while we’re still in this early phase without making a dent in your bank account. By investing the spare change from your daily purchases into a custom-tailored cryptocurrency portfolio of the top performing coins, you can invest without even thinking about it.

Compared to the gains you will get with cryptocurrencies, the spare change in your checking account will be wasted as inflation reduces your dollars to dust. $100 invested Bitcoin in 2009 would be worth millions today, so invest your spare change with Satochi and see where it goes.

Click here to get your name on the Satochi waiting list and be first to get the app.